BTB Liquidity Protection Hook

A Uniswap V4 hook designed to protect liquidity providers from impermanent loss by providing compensation in BTB tokens.

Overview

The BTB Liquidity Protection Hook is a sophisticated smart contract that integrates with Uniswap V4 pools to provide protection against impermanent loss for liquidity providers. When LPs experience a loss upon removing their liquidity, they receive compensation in BTB tokens based on the USD value of their loss.

Features

Liquidity Protection

• Tracks initial USD value of liquidity provided
• Calculates losses when liquidity is removed
• Automatically compensates LPs with BTB tokens for their losses
• Supports multiple positions per user

Governance

• Owner-controlled BTB token address and price settings
• Voter share system for potential governance decisions
• Impermanent Loss (IL) reserve for future enhancements

Administrative Functions

• Owner can update BTB token address and price
• Owner can manage voter shares
• Emergency functions to recover tokens or ETH
• IL reserve funding mechanism

Key Components

BTB Token Integration

• BTB tokens are used as the compensation currency
• Token price is maintained in USD (18 decimal precision)
• Example: If 1 BTB = $1, then btbTokenPrice = 1e18

Investment Tracking

• Records initial USD value when liquidity is added
• Compares final value when liquidity is removed
• Calculates loss and provides appropriate compensation

Hook Callbacks

1. beforeAddLiquidity: Pass-through callback
2. afterAddLiquidity: Records initial investment value
3. beforeRemoveLiquidity: Pass-through callback
4. afterRemoveLiquidity: Calculates loss and provides compensation
5. beforeSwap & afterSwap: Pass-through callbacks

Usage

For Liquidity Providers

1. Add liquidity to a Uniswap V4 pool using this hook
2. Your initial investment value is automatically recorded
3. When removing liquidity:
   • If value has decreased: Receive BTB tokens as compensation
   • If value has increased or stayed same: No compensation needed

For Administrators

1. Set BTB token address:

hook.setBTBToken(address _btbToken)

2. Update BTB token price:

hook.setBTBTokenPrice(uint256 newPrice)

3. Manage voter shares:

hook.updateVoterShares(address voter, uint256 shares)

4. Fund IL reserve:

hook.fundILReserve(uint256 amount)

Security Features

• All admin functions are protected by OpenZeppelin's Ownable
• Zero-address checks for critical parameters
• Balance checks before token transfers
• ETH receiving capability for future enhancements

Events

• VoterSharesUpdated: Emitted when voter shares are modified
• ILReserveFunded: Emitted when IL reserve receives funding
• ILCompensationPaid: Emitted when compensation is paid to an LP
• BTBTokenUpdated: Emitted when BTB token address is updated
• BTBTokenPriceUpdated: Emitted when BTB token price is updated

Dependencies

• OpenZeppelin Contracts v5.2.0
• Uniswap V4 Core
• Uniswap V4 Periphery

Development

Prerequisites

• Foundry
• Node.js
• Git

Installation

git clone https://github.com/your-repo/BTBLiquidityProtection
cd BTBLiquidityProtection
forge install

Testing

forge test

License

MIT